2023 (1) TMI 696 - HC - Customs

Customs Act Penalties Upheld for Gold Jewelry Import/Export Violations

Samrah Gold Factory Limited Versus The Commissioner Of Customs And 2 Others

The High Court upheld the dismissal of appeals by M/s Deepu Jewellers LLC, Kishore Ratilal Dhakan, and M/s Samrah Gold Factory Limited by CESTAT due to ... Dismissal of appeal - alleged defect, for non-compliance of mandatory pre-deposit in terms of Section 129E of the Customs Act - seeking grant of leave to maintain the appeals against the order of CESTAT and allow the same by quashing of the show cause notices - Levy of penalty under Section 114 of the Customs Act - HELD THAT:- As the appellants herein have failed to fulfill the pre-condition of 7.5% of the demanded duty/penalty as per the order of the Commissioner of Customs, NOIDA dated 18.10.2018, this had to necessarily result in dismissal of their appeals by the CESTAT. There was no discretion with the tribunal to condone the pre-condition of mandatory deposits on the ground of undue hardship. As far as lack of jurisdiction to issue show cause notice is concerned, the said issue could have been considered once the appellants were able to maintain their appeals by making mandatory pre-deposits before the CESTAT. The appeals before us challenging the orders of the CESTAT dated 29.8.2009 in dismissing three appeals as not maintainable on account of defect of mandatory pre-deposit under Section 129E, therefore, deserve dismissal. Jurisdiction - whether any substantial question of law arises for determination in the instant appeal? - HELD THAT:- In view of the admitted fact that the confiscated gold jewellery from the factory and residential premises of M/s Ajit Exports and factory premises of M/s Vee Ess Jewellers two SEZ units were exported by M/s Deepu Jewellers and M/s Samrah Gold Factory, the Managing Director and the Director of whom was Sri Kishore Ratilal Dhakan at the relevant point of time, we are required to examine as to whether the penalty imposed upon the appellants herein under Sections 112, 114, 114AA is without jurisdiction - A conjoint reading of Sections 112 and 114 of the Customs Act which deal with penalty for ''improper import' and ''improper export' or attempt to export goods improperly clearly shows that the penalty can be imposed on 'any person', not only such person who does or omits to do any act in relation to any goods liable to confiscation under Section 111 or 113, but would also include such person who abets the doing or omission of such an act. The penalty, thus, can be imposed under Section 112 or Section 114 upon not only the importer or exporter; respectively, but also upon ''any person' who commits an act of abetment, i.e. to help or aid exporters or importer in such wrong doing. In the instant case, the appellants companies incorporated in Sharjah and Dubai which were limited liability companies, 49% of share of which were held by Indian Nationals namely its Managing Director/Director Sri Kishore Ratilal Dhakan and Deepak Ratilal Dhakan were doing illegal business in India through two SEZ units namely M/s Ajit Exports and M/s Vee Ess Jewellers. Sri Kishore Ratilal Dhakan was also the share holder of M/s Vee Ess Jewellers. The permission to import gold jewellery without Customs duty and Cess was with the specific condition that the old/outdated gold jewellery imported to carry out process of assembling, refinishing, plating and remaking would be sent back to the exporters the appellants herein - the offence of improper importation and attempt to improper export by diversion of gold jewellery in the local market under mis-declaration from SEZ units had been committed within the territorial limits of India as defined in Section 2(27) of the Customs Act, 1962, the issue of jurisdiction of the Customs Authorities in India to impose penalty upon the Appellants does not arise. The appellants herein have submitted themselves to the jurisdiction of the Customs Act upon the notices issued to them under Section 108 of the said Act and filed appeals against the order of the adjudicating authority under Section 129A(a) of the Customs Act, 1962, without complying with the mandatory condition of pre-deposit under Section 129E(ii) of the Customs Act, 1962, the appeals filed by them have been rightly dismissed as non-maintainable for non-fulfillment of mandatory condition of pre-deposit. No infirmity could be found in the decisions of the Appellate Tribunal in dismissing the appeals as not maintainable - Appeal dismissed. Issues Involved:1. Dismissal of appeals by CESTAT due to non-compliance with mandatory pre-deposit under Section 129E of the Customs Act, 1962.2. Jurisdiction of Customs Authorities to impose penalties on foreign companies and non-resident individuals under the Customs Act.3. Legality of penalties imposed for improper importation and attempted improper exportation of gold jewelry.Detailed Analysis:1. Dismissal of Appeals by CESTAT:The appeals filed by M/s Deepu Jewellers LLC, Kishore Ratilal Dhakan, and M/s Samrah Gold Factory Limited were dismissed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 29.08.2019 due to non-compliance with the mandatory pre-deposit requirement under Section 129E of the Customs Act, 1962. Despite adjournments, no deposit was made towards the mandatory pre-deposit. The High Court upheld the dismissal, stating that the mandatory pre-deposit requirement under the amended Section 129E (effective 01.10.2014) is non-negotiable and must be complied with for an appeal to be maintainable. The court referenced the Supreme Court's decision in Chandra Sekhar Jha vs. Union of India, emphasizing that the amendment reduced the deposit requirement to 7.5% but removed the Tribunal's discretion to waive it.2. Jurisdiction of Customs Authorities:The appellants argued that the Customs Authorities lacked jurisdiction to impose penalties on them since they were foreign companies and individuals. They contended that the Customs Act, prior to its amendment on 29.03.2018, did not extend beyond the territory of India. The High Court rejected this argument, noting that the offenses were committed within India, specifically through SEZ units in NOIDA. The court emphasized that the Customs Act applies to any person within India and that the appellants had engaged in activities that violated the Act within Indian territory. The court cited several cases, including the CESTAT's decision in M/s Seville Products Limited vs. Commissioner of Customs, to support its stance that the Customs Act's jurisdiction extends to any person committing offenses within India.3. Legality of Penalties Imposed:The penalties were imposed for the improper importation and attempted improper exportation of gold jewelry. The appellants were found to have conspired to smuggle new, high-end foreign-made gold jewelry into India under the guise of old/outdated jewelry, thereby evading customs duties. The court upheld the penalties, noting that the appellants had violated Sections 111, 112, 114, and 114AA of the Customs Act. The court detailed the findings of the Commissioner of Customs, which included the appellants' involvement in diverting gold jewelry to the local market without payment of duties and using false declarations. The court concluded that the penalties were justified given the appellants' direct involvement in the illegal activities.Conclusion:The High Court dismissed all connected appeals, affirming the CESTAT's decisions. The court held that the mandatory pre-deposit requirement under Section 129E is non-negotiable, the Customs Authorities have jurisdiction over offenses committed within India, and the penalties imposed for improper importation and attempted improper exportation were legally justified. No substantial question of law was found for determination, and the appeals were dismissed with no order as to costs.